The key ingredient for success that many small businesses ignore
Even within the busiest shopping precincts there is sometimes a revolving door of businesses.
The issue, according to the experts, is that many small business owners – particularly within the hospitality sector – don’t understand that the location within a busy precinct is still important.
Karli Dunham, director of Just Business Brokers and the 2016 Real Estate Institute of Victoria business broker of the year, said the position of a small business – even within a prime precinct – ultimately underpinned its chances of success or failure.
”The good old real estate saying of ‘location, location, location’ is still just as important when it comes to a commercial lease and the potential success of a small business, as you need to ensure the consumer can walk past or can at least visually see your product for the best chance of success in a highly competitive retail precinct,” she said.
A lot of foot traffic is one of the best things for a small business. Photo: Bradley Kanaris
”The key to any new food outlet is exposure – to get the consumer aware of the product by being in a food court or outside a major [supermarket] with high food traffic you are increasing your chances of potential customers walking past your premises.”
But just because a prime location had previously been successful didn’t mean it would always be that way. Operators often failed to understand the fundamentals of the previous small business’s success, she said.
”Often we see well-known and profitable cafes and restaurants change hands and the new vendors run them into the ground as they didn’t take the time to see what was already good in the venue before they started changing things around,” Ms Dunham said.
When considering leasing space within a prime retail precinct, it was also important that small business owners understood the demographics of the area, CBRE Retail Services associate director Anna Dunworth said.
Understanding the demographics of an area is also key to the success of a small business. Photo: Bradley Kanaris
For example, if a high-end restaurant opened up in a family area, it was unlikely to succeed.
For most businesses, though, one of the keys to success was foot traffic.
”A lot of people make the mistake of getting enticed by a more affordable rent and just getting into the area generally, but that really comes down to the strength of the operator and their ability to pull people from the main drag,” she said.
”If they don’t have a really strong brand name or an excellent offering that people are prepared to travel further for, then it just won’t work.
”That goes for locations in the city as well as in suburbs like [Brisbane’s] West End, Fortitude Valley, Newstead and Paddington.
”They’re better off paying the market rents and getting into a proven location where there is foot traffic and there are other businesses that they can feed off and that are actually trading.”
